The simple answer to the question of whether an injury settlement will impact disability benefits depends on the kind of benefits a person is collecting. Precisely, it depends on whether the person is collecting benefits under the Supplemental Security Income (SSI) program or Social Security Disability Insurance (SSDI) program.
If the person is collecting SSDI benefits, then an injury settlement will have no direct effect on his or her benefits. If the person is collecting SSI benefits, then an injury settlement could result in a decrease or loss of benefits.
Injury Settlement Award and SSDI Benefits
If a person collects SSDI benefits, then an injury settlement won’t have a direct effect on his or her disability benefits even if it’s a lump sum. The simple reason is that SSDI benefits eligibility is hinged on the claimant’s work history rather than his or her financial situation.
Whether an SSDI recipient has sustained a personal injury and obtained monetary compensation, his or her settlement award won’t have any effect on his or her work credits. The recipient will continue collecting monthly SSDI payments.
Injury Settlement Award and SSI Benefits
SSI is a needs-based program that reviews the applicant’s financial circumstances to determine eligibility. Consequently, receiving a personal injury settlement could make the SSI benefits recipient go above the program’s asset limits. The outcome of this situation is losing the benefits.
Protecting SSI Benefits
Spending Down
Spending down involves the recipient using the excess money until he or she attains the program’s asset limit. The recipient should spend down in the first month of receiving the lump sum so he or she will lose only a month of SSI benefits. Some of the appropriate ways to spend the money include paying back a home mortgage, covering education costs, paying burial expenses in advance, and modifying or repairing the home to meet the recipient’s unique needs.
Establishing A Special Needs Trust
A Special Needs Trust (SNT) is designed for individuals with physical or mental disabilities. A third-party (trustee) in charge of the SNT oversees how funds in the trust are spent.
A long-term disability attorney who is familiar with both Social Security disability laws and personal injury laws can help the disability benefits recipient navigate the obstacles involved when there is an intersection between these two areas of law. The attorney can also provide reliable advice on how to safeguard SSI benefits.
